Bill to eliminate state income tax for many working families now heads to Governor

Santa Fe, N.M. - After conference committee meetings Friday, the House of Representatives and the Senate both voted to agree on amendments to House Bill 14, a tax bill that would effectively eliminate state income tax for tens of thousands of New Mexico families.

HB 14 increases and expands tax cuts for nearly 400,000 New Mexicans, includes credits for foster parents and guardians, expands a Gross Receipts Tax deduction for healthcare practitioners, and makes a modest increase to taxes on alcoholic beverages, directing funds to address alcohol related harms across New Mexico.

HB 14 would effectively eliminate state income tax for:

Married couples

Single individuals
with three kids making $70,000 or less

with three kids making $60,000 or less
with two kids making $65,000 or less

with two kids making $55,000 or less
with one kid making $55,000 or less

with one kid making $40,000 or less
with no kids making $30,000 or less

with no kids making $25,000 or less

These tax cuts are refundable, so families would receive a refund payment for any credits going beyond the household's state tax liability.

"In an open and transparent process, members of the House and the Senate came together to reach an agreement on a tax package that will bring relief to New Mexico families who are struggling to keep up with rising costs," said HB 14 sponsor Rep. Derrick Lente (D-Sandia Pueblo), who serves as Chair of the House Taxation and Revenue Committee. "In the face of economic uncertainty at the federal level, New Mexico is putting more money in the pockets of the public school teachers, police officers, firefighters, and the workers who power our state."

The amended tax bill now also includes:

Foster Parent and Guardian Tax Credit: provides financial relief for foster parents and guardians with a refundable $250 per month credit Liquor Excise Tax Increase: raises the liquor excise tax by 20% to generate additional revenue for targeted programs to help address alcohol harms and support treatment
Health Practitioner Coinsurance Deduction: expands the existing Gross Receipts Tax deduction for healthcare providers to include coinsurance payments

Most of the tax changes in this bill would take effect in fiscal year 2027. HB 14 now heads to the Governor's desk to be signed into law.

Members of the public are welcome to attend floor sessions and committee meetings at the New Mexico Roundhouse, and can tune in virtually through the New Mexico Legislature's Webcasts tab. Public comment can also be provided in-person, and via phone or Zoom as directed on the daily schedule.